Huatai Securities said recent heat pushed southern China peak power load to
record highs for four straight days, with peak demand rising nearly one month
earlier than normal, acting as a catalyst for the power sector. Coal-fired
generation should benefit directly from higher utilization hours and higher
spot/monthly power prices as peak loads persist. Markets may fear rising demand
will lift coal prices, but higher coal costs also support market-based
electricity tariff increases, permitting gradual pass-through of cost pressure.
Power equities remain on the left of fundamentals, implying scope for a
sustained price rebound. High temperatures most directly boost thermal power;
clean energy could also gain from energy-driven electricity price upside.
